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    Q4 Spotlight--Specialty Finance Q4 Spotlight--Specialty Finance Document Transcript

    • Specialty Finance: Filling the Gap MSF Enterprises, LLC ABSTRACTInside Story: Although the economy continues to recover from the recession (2007-2009), a number of economic factors have been slow to improve and credit has remained largely restricted. While prime interest rates have been pushed to historic lows, small-to-medium sized INSIDE STORY: businesses and consumers with poor credit have been unable to take advantage. Traditional banks have tightened lending standards and have demonstrated a general unwillingness to Introduction p.1 extend credit to higher risk consumers. Specialty finance firms, which provide access to capital outside the traditional banking system, have been responsible for filling a portion of Role of the credit gap left behind by major banks. In this setting, specialty finance plays a critical Specialty Finance p.2 role in the broader financial system by extending credit and stimulating growth through consumers and businesses. Given the characteristics of the market, the specialty finance Public Specialty segment features a number of attractive investment opportunities and can provide high Finance Companies p.4 yield potential in a low interest rate environment. Enterprise Specialty Finance p.5 Consumer Specialty Finance p.6 Conclusion p.9 Expected 5 Yr Loan Rate Based on Credit Quality 25% 20% 15% 10% 5% 0% U.S. Government U.S. Corporate U.S. Corporate Middle Market Prime Consumer Non-Prime Subprime (Investment (Speculative Firm (Loan from (FICO > 680) Consumer (FICO Consumer (FICO Grade) Grade) Specialty 620-679) < 619) Lender) December 2012 Denver ● New York *Highlighted categories reflect potential borrowers in the specialty finance space. Rates are approximated for illustrative purposes. MSF Enterprises, LLC Copyright © 2012
    • Q4 2012 Spotlight Specialty Finance: Filling the Gap 1 INTRODUCTION Coming out of the recession (2007 – 2009), the U.S. economy entered a period of consumer retrenchment and corporate deleveraging in which loose borrowing practices that contributed to the formation of a credit bubble were temporarily abandoned. As of Q3 2012, U.S. households were paying less than 16% of after-tax income to cover debt payments and lease obligations, the lowest level since 19841. Meanwhile, the average credit card balance declined over 24% since the second half of 2008 and the total number of cards in circulation dropped over 20%2. Corporations have largely cleaned up their balance sheets as well, with the S&P 500 approaching a record cash level of $1.5 trillion3. Banks have similarly tightened up their books, with total loans outstanding among the four largest lenders falling nearly 5% in the first quarter of 2012 from the same period two years earlier4. Exhibit 1: Deleveraging in the U.S. *Chart and data from Federal Reserve The past few years have featured the beginning of a deleveraging process among businesses and households. Many firms and individuals have become more willing to borrow recently, yet are unable to access capital. The process of widespread deleveraging presents a tremendous obstacle to economic growth and has prompted the Fed to target lower interest rates and encourage borrowing through various easing programs. While interest rates have dropped to all-time lows, the outcome for the end-borrower has been mixed. Many qualified consumers and businesses have been able to take advantage of low interest rates by refinancing current obligations and floating longer-dated notes. Lower quality borrowers, however, are still struggling to obtain financing as banks have yet to loosen credit standards despite a significant increase in demand for auto loans, mortgages and other forms of credit5. Although consumers and businesses remain cautious about ramping up spending due to continued economic uncertainty, a number of likely borrowers are still largely excluded from the capital markets. Regional banks have expanded their lending practices to pick up some of this unmet demand, increasing total loan volume nearly 10% from Q1 2010 to Q1 20126. Still, there is a shortage of credit for consumers and companiesMSF Enterprises, LLC www.msfenterprises.com Copyright © 2012
    • Q4 2012 Spotlight Specialty Finance: Filling the Gap 2 perceived as “high risk.” The unwillingness of the traditional banking system to lend to this demographic effectively limits growth potential, as the subprime and non-credit categories account for more than 100 million U.S. consumers. A number of firms have been successful providing financing to these “high risk” customers, with specialty finance playing an important role in the current low-growth, credit-restricted environment. Exhibit 2 Bank Share of Non-Investment Grade Lending 80% 70% 60% 50% 40% 30% 20% 10% 0% *Data from Federal Deposit Insurance Corporation (FDIC) With banks increasingly unwilling to lend to high risk customers, specialty finance and the shadow banking system have accepted the role of providing credit to smaller, non-investment grade companies. ROLE OF SPECIALTY FINANCE Specialty finance can be broadly characterized as any financing activity that takes place outside of the traditional capital provision services of the banking system. Typically, specialty finance firms are thought of as being non-bank lenders that make loans to consumers and small to medium-sized businesses (SMB’s) that cannot otherwise obtain financing. For our purposes, we consider specialty finance as encapsulating a much larger array of activities that basically includes any unconventional means of providing or transferring capital. Without a consensus in the industry regarding the definition and scope of specialty finance, this paper will seek to address the importance of the segment and potential opportunities it may provide. In order to determine the range of transactions included in the specialty finance segment, we will first provide an examination of the typical firm operating in the space, including its target market and potential sources of capital. Specialty finance activities are often a component of the shadow banking system, as many of the firms that operate in the space are non-bank lenders. Shadow banking is comprised of non-bank financial institutions that act as credit intermediaries without exposure to the same regulation as their commercial bank counterparts7. The firms are not burdened by restrictions on leverage, yet cannot access central bank funding or government safety nets like deposit insuranceMSF Enterprises, LLC www.msfenterprises.com Copyright © 2012
    • Q4 2012 Spotlight Specialty Finance: Filling the Gap 3 (until there is a financial crisis, of course). However, since traditional banks can also package their offerings in unconventional ways, specialty finance cannot be strictly classified as a form of shadow banking. Instead, we have loosely characterized specialty finance firms as those willing to take greater risk to provide financial services to clients that do not fit into a standard “credit box.” Specialty finance firms generally offer services to unbanked or underbanked consumers, as well as SMB’s that encounter cash-flow problems or may be experiencing a brief period of declining performance. Unable to obtain financing from a bank, these customers are forced to turn to specialty finance companies and are subject to above-average interest rates. By charging a higher rate and using various forms of collateral as protection against default, specialty finance firms are able to compensate for riskier credit profiles. Offering higher-yield potential in a low-rate environment, specialty finance is an attractive business model to a range of financial firms capable of underwriting the added risk. As a result, a number of specialty lenders have been drawn into the space along with other firms looking to enhance their returns, such as hedge funds and private equity groups. Aside from an increase in the level of risk that specialty finance firms are willing to take on, they further differ from banks in terms of the way they are capitalized. While banks are primarily funded by customer deposits and Federal Funds, firms operating exclusively in the specialty finance space must access the capital markets to obtain funding. Those with strong credit ratings are able to take advantage of the commercial paper market, yet this highly liquid segment tends to dry up during periods of instability, as observed during 2007-20098. Finance companies with favorable credit ratings will take on unsecured debt if it is available, yet this type of borrowing often takes the form of secured debt when the economic outlook turns negative. If the outlook is positive and investors have an appetite for risk, specialty finance companies are able to raise funds through securitization. Issuance of such asset-backed securities in 2012 is down considerably from pre-recession levels, with $174.2 billion raised through October 2012 compared to $753.9 billion for the full year 20069. At the same time, the market for these products may be showing signs of improvement as 2012 issuance is up 65% over the prior year10. Regardless of the funding method, specialty finance firms will face a much higher cost of capital than commercial banks and must therefore seek out riskier transactions to achieve favorable net interest margins. There are a number of different types of specialty finance activities, which we have arranged into two segments for this paper: enterprise specialty finance and consumer specialty finance. We will examine these categories and provide an evaluation of the market opportunities in each segment. Bank’s closed folks… Check out Specialty Finance as an alternative source for your capital needsMSF Enterprises, LLC www.msfenterprises.com Copyright © 2012
    • Q4 2012 Spotlight Specialty Finance: Filling the Gap 4 Exhibit 3: U.S. Publicly Traded Specialty Finance Companies Firm Ticker Category Description P/E Firm provides non-recourse pawn loans, payday loans, installment loans, auto title Consumer loans, debit cards and other fee-based credit EZCORP, EZPW Specialty services. The company also sells merchandise 7.0x Inc. Finance and operates over 1,100 physical store locations under the EZPAWN, Value Pawn and EZMONEY brands. Firm provides pawn lending, consumer loans, check cashing, money orders, wire transfers, Cash America Consumer pre-paid debit cards and other credit services. International, CSH Specialty The company has over 1,000 physical 10.3x Inc. Finance locations and also operates through its Internet lending activities. Firm offers general purpose reloadable prepaid debit cards and cash loading/transfer services. Consumer The company markets its cards and services to Green Dot GDOT Specialty banked, underbanked and unbanked 9.9x Corporation Finance consumers and offers its products through retail distributors, mass merchandisers, convenience stores and online. Company operates as an automotive retailer Consumer with 117 dealerships, primarily selling older Americas CRMT Specialty model used vehicles and providing financing 11.2x Car-Mart Inc. Finance for its customers under the Buy-Here-Pay- Here (BHPH) business model. Firm provides auto loans and related services to consumers by purchasing consumer loans Credit Consumer from dealer-partners, often BHPH dealers, or Acceptance CACC Specialty by advancing money to dealer-partners in 11.5x Corp. Finance exchange for the right to service the underlying consumer loans. Firm operates as a Business Development Company (BDC)** and offers senior debt, Enterprise American mezzanine debt and equity to fund growth, ACAS Specialty 2.5x Capital, Ltd. acquisitions, recapitalizations and Finance securitizations, investing $5MM-$800MM per company. Firm operates as a BDC, lending and investing Enterprise Full Circle primarily in senior secured loans, as well as FULL Specialty 23.6x Capital mezzanine loans and equity securities issues Finance by lower middle market companies. *Firm descriptions from Yahoo! Finance **Business Development Companies (BDC’s) are a form of publicly traded private equity that make investments in small and middle market businesses. BDC’s are taxed as regulated investment companies with a pass- through structure, distributing at least 90% of taxable income as dividends.MSF Enterprises, LLC www.msfenterprises.com Copyright © 2012
    • Q4 2012 Spotlight Specialty Finance: Filling the Gap 5 ENTERPRISE SPECIALTY FINANCE Companies that have exhausted the traditional avenues for raising debt may turn to specialty finance firms for funding through various loan structures and other exotic instruments. Direct lending from hedge funds and private equity groups has become increasingly popular for middle market companies that have been declined credit or are unable to receive favorable loan terms from traditional banks. Faced with a shortage of market-traded debt instruments that carry attractive yields, money managers have taken an opportunistic approach to the credit crunch by providing debt facilities. Debt provided by institutional investors typically carries an interest rate of around 9-12% that can increase depending on the perceived risk of the borrower11. With such high yield potential, several hedge funds and private equity firms have initiated new funds to focus on direct lending strategies over the past few years12. Middle market firms are often able to leverage assets on their balance sheet, such as inventory or accounts receivable, as collateral to obtain short-term financing. Inventory- based lending is a common practice among retailers, in which inventory is pledged as collateral to secure a loan. The lender will conduct an appraisal of the inventory and lend against the net orderly liquidation value in order to protect against downside risk13. Accounts receivable can also be used as loan collateral, as invoice discounting enables a firm to borrow against existing sales invoices. Alternatively, receivables can be sold outright in a process called factoring, which allows the company to sell off the asset at a discount. Due to the nature of the business and the way payments are structured, receivables-based lending is a critical aspect of the healthcare industry. With U.S. medical spending projected to reach 20% of GDP by 202114 and Obamacare expected to further complicate payments in the industry, healthcare receivables should continue to provide attractive investment opportunities in both the primary and securitization markets. Along with other types of asset-based lending, these loans are important for many companies because the lender’s risk is derived from the value of a particular asset, and is not influenced by the overall financial strength of the company. Royalty-backed notes have also emerged as a special structure enabling companies in difficult borrowing positions to fund their operations. Bonds backed by intellectual property rights first reached a mainstream audience in relation to the music industry. In the late 1990’s, Bowie Bonds (also called Pullman Bonds, after the banker that negotiated the deal) were introduced, backed by underlying cash flows tied to royalties on David Bowie’s music catalog15. The structure has been revived in recent years within the capex- intensive pharmaceuticals industry, as firms have looked to sell off future royalty streams in order to obtain immediate cash flow to fund further research and development 16. With the global pharmaceuticals market expected to reach $1.1 trillion by 201417 and further product innovation required to meet the needs of an aging population, there should continue to be royalty-backed investments available in the space. Since IP securitizations have not been fully explored across industries, the area could provide significant opportunities for firms deprived of capital and investors looking to take advantage.MSF Enterprises, LLC www.msfenterprises.com Copyright © 2012
    • Q4 2012 Spotlight Specialty Finance: Filling the Gap 6 Exhibit 4: Royalty Bond Structure The royalty bond structure typically benefits from multiple forms of downside protection, including counterparty risk mitigation, over-collateralization and a flexible final maturity date. Firms that wish to raise equity yet do not have the necessary scale to complete a public offering through an investment bank are forced to either locate private investors or take an alternative approach. Crowd funding has emerged as a way for relatively small companies to circumvent the traditional equity raising process while bringing in the needed capital to grow their business. The potential for start-ups and franchises to raise equity through crowd funding is a recent development made possible with the passage of the JOBS Act in April 2012, which eased a restriction on public solicitation from private companies seeking to raise equity18. Since crowd funding is a relatively new form of specialty finance, there are a number of potential risks that must be addressed in terms of investor protection. The SEC has not yet determined the exact rules for crowd funding, so it may take some time before the landscape for this type of investment can be fully understood. Yet considering the overwhelming number of small businesses in need of capital and the appeal of being an early-stage investor, there are likely to be substantial opportunities in the future for crowd funding. CONSUMER SPECIALTY FINANCE Consumers that have either a poor FICO score or unestablished credit will have limited choices when seeking financing. Specialty finance firms may extend credit to these individuals, but usually in smaller amounts in order to mitigate risk. The buy-here-pay- here (BHPH) model, commonly used by independent auto dealerships, can be an effective method of providing financing to individuals with low FICO scores or limited credit histories. When a consumer is unable to obtain financing from a bank, a store or dealership may lend directly to the customer to fund the purchase, profiting from both the sale and the financing process. Under this arrangement, a higher interest rate is charged and a larger down payment is required to ensure some level of protection if the borrower defaults and the automobile must be repossessed. The lender utilizes a number of additional risk-reduction methods, such as requiring in-person payments and installing GPS systems to expedite the process of collateral recovery19. In a low interest rate environment, the high-yielding paper from BHPH transactions can provide attractive investment opportunities even with an expected default rate of 30% factored in.MSF Enterprises, LLC www.msfenterprises.com Copyright © 2012
    • Q4 2012 Spotlight Specialty Finance: Filling the Gap 7 Loans that effectively force the borrower into making regular, timely payments also provide an alternative form of financing for consumers that most banks would generally prefer to avoid. Payday loans—short-term loans that must be repaid on the borrower’s next pay date—are one of the more common forms of borrowing for low credit consumers. The lender will typically verify employment, charge an above-average APR and set up an electronic funds transfer agreement in an attempt to ensure repayment. With such loans averaging 10-20% default rates20, payday lenders must have a number of protections in place to assure profitability. Payroll deduction loans similarly rely on the borrower’s employment status by enabling a worker to obtain a cash advance and then amortize the loan with each check received. Since a portion of the borrower’s check is automatically deducted for loan service, the lender is able to mitigate its risk as long as the customer maintains employment. In a similar structure, on-bill financing ensures repayment by combining loan payments with an existing obligation, such as a utility bill. On-bill financing is most applicable with property improvements, in which the cost is received as part of the bill from a utility company or other service provider. As a delinquent payment would result in the customer being shut off from utility privileges, the borrower’s incentive is increased and the lender’s risk is mitigated. Collateralized non-recourse loans, in which the lender cannot pursue anything other than the collateral pledged, provide another loan structure that incentivizes the borrower to stay current on payments. Only the collateral can be collected in the event of default, so the lender will typically target a low loan-to-value ratio and charge a higher interest rate to offset risk. Low credit consumers are often eligible for this type of financing through a pawn shop, in which personal property is used to secure a loan. If the customer does not pay back the loan plus interest within a specified period of time, the pawn broker takes ownership of the item and sells it at a mark-up to cover the loan amount. Exhibit 5: Percentage of U.S. Households That Have Used Alternative Financial Services (AFS) *Chart and data from Federal Deposit Insurance Corporation (FDIC)MSF Enterprises, LLC www.msfenterprises.com Copyright © 2012
    • Q4 2012 Spotlight Specialty Finance: Filling the Gap 8 Aside from obtaining loans, unbanked and low credit consumers often require a range of additional banking-type services that must be addressed through specialty finance. Since some of these customers do not maintain checking accounts, they can encounter difficulties when attempting to execute various types of financial transactions. For example, consumers that do not qualify for a traditional credit card might utilize a prepaid debit card as an alternative. Such prepaid cards enable the user to make purchases and pay bills online, yet typically do not require any type of bank account. Although 88% of consumers had a checking account in 2011, the amount has declined from the 2010 level of 92%, primarily due to banks charging higher fees21. Consumers paid an average of 21% more to maintain checking accounts in 2011 than in 200622. With the increase in bank fees, an estimated 13% of U.S. adults used a prepaid debit card in 2011, up from 11% in 201023. At the same time, the percentage of U.S. consumers carrying a credit card fell 9% in 2011 over the previous year, while debit card penetration fell 15%24. Prepaid cards enable financial institutions to access otherwise unreachable consumers, and they are able to capitalize through a bevy of fees including activation, monthly maintenance, balance verification and loading fees. Unbanked consumers also require services for money transfers and remittances, which may be administered by commercial banks or non-bank financial institutions. These services are heavily relied upon by the customer and providers are able to take advantage, charging an average fee of 7.6% of the transaction size for global cash remittances in 201125. Changes in legislation intended to protect consumers from predatory lending could present future issues for firms operating in the specialty finance space. These changes require additional disclosure statements and provide strict limits on the maximum interest rates that can be charged to consumers. Since the majority of consumer protection legislation has been passed on a state-by-state basis, a high degree of uncertainty remains over how restrictions may evolve in the future. In the event that regulation does increase, firms with easy access to capital and highly scalable operations should be in the best position to outperform competitors, along with firms that focus on states where regulation is more relaxed. Increased regulation may result in traditional banks becoming more risk averse, which would actually provide a boost to the specialty finance segment by expanding the base of customers requiring unconventional loan services.MSF Enterprises, LLC www.msfenterprises.com Copyright © 2012
    • Q4 2012 Spotlight Specialty Finance: Filling the Gap 9 Exhibit 6: Banking Characteristics of U.S. Households *Chart and data from Federal Deposit Insurance Corporation (FDIC) CONCLUSION Low credit consumers and small-to-medium sized businesses continue to be underserved by traditional banks. With approximately 60 million unbanked and underbanked consumers in the U.S. spending a total of $78 billion on financial services each year26, there are tremendous opportunities for specialty finance companies that cater to this demographic. With employment slow to improve and the overall economic outlook uncertain, it is unlikely that banks will return to pre-recession lending standards in the near future. As a result, financial firms that are willing to take on additional risk to serve non-traditional customers will continue to find opportunities with higher yield potential. While specialty finance features a number of characteristics that we believe make it an interesting space in the long term, it should at least continue to provide attractive opportunities for the duration of the current low interest rate environment. Michael Fields Managing Partner MSF Enterprises, LLC 717 17th St., Suite 2160 Denver, CO 80202 fieldsm@msfenterprises.com 303.847.4649MSF Enterprises, LLC www.msfenterprises.com Copyright © 2012
    • Q4 2012 Spotlight Specialty Finance: Filling the Gap 10 Disclaimer This document is provided for informational purposes only, is subject to change and is not binding. MSF Enterprises, LLC makes no guarantees regarding the information contained herein and any statements represent the opinions of the firm. MSF Enterprises, LLC is not responsible for any information stated to be obtained from third party sources. Any companies, asset types or investment opportunities mentioned in the document are for illustrative purposes only and are not intended as recommendations. MSF Enterprises, LLC is not responsible for the use made of this document other than the purpose for which it is intended, except to the extent this would be prohibited by law. Obtain independent professional advice before investing.MSF Enterprises, LLC www.msfenterprises.com Copyright © 2012
    • Q4 2012 Spotlight Specialty Finance: Filling the Gap 11 Endnotes 1. Lee, Don. “U.S. families’ debt loads decline to pre-recession levels.” Los Angeles Times. 15 October 2012. 2. Ibid. 3. Cox, Jeff. “Companies Sitting on More Cash Than Ever.” CNBC. 23 October 2012. 4. Marcinek, Laura. “Biggest U.S. Banks Curb Loans as Regional Firms Fill Gap.” Bloomberg. 25 June 2012. 5. Zumbrun, Joshua. “Fed Sees Rising Demand for Auto and Mortgage Loans.” Bloomberg Businessweek. 31 October 2012. 6. Marcinek, Laura. “Biggest U.S. Banks Curb Loans as Regional Firms Fill Gap.” Bloomberg. 25 June 2012. 7. “The Deloitte Shadow Banking Index: Shedding Light on Banking’s Shadows.” Deloitte. 2012. 8. Kacperczyk, Marcin and Philipp Schnabl. “When Safe Proved Risky: Commercial Paper During the Financial Crisis of 2007-2009.” Journal of Economic Perspectives. Vol. 24: Issue 1. 2010. 9. “Issuance in U.S. Bond Markets.” SIFMA. 2012. 10. Ibid. 11. Chassany, Anne-Sylvaine and Jesse Westbrook. “Private Equity Enters Banks’ Turf in Europe.” Bloomberg. 8 February 2012. 12. Ahmed, Azam. “Bank Said No? Hedge Funds Fill a Void in Lending.” NY Times Dealbook. 8 June 2011. 13. Foley, C. Fritz; Raman, Ananth and Nathan C. Craig. “Inventory-Based Lending Industry Note.” Harvard Business School. 2012. 14. Wayne, Alex. “Health-Care Spending to Reach 20% of U.S. Economy by 2021.” Bloomberg Businessweek. 13 June 2012. 15. Richardson, Karen. “Bankers Hope for a Reprise of ‘Bowie Bonds.’” The Wall Street Journal. 23 August 2005. 16. Tempkin, Adam. “Bonds backed by drug-royalty cashflows make a return.” Reuters. 5 March 2012. 17. Jung, Jeff and John Tamisiea. “Not Your Parents’ Royalty Fund.” McDermott Will & Emery LLP. 12 October 2010. 18. Landler, Mark. “Obama Signs Bill to Promote Start-Up Investments.” The New York Times. 5 April 2012. 19. Bensinger, Ken. “A vicious cycle in the used-car business.” Los Angeles Times. 30 October 2011. 20. McArdle, Megan. “On Poverty, Interest Rates and Payday Loans.” The Atlantic. 18 November 2009. 21. Ody, Elizabeth. “Prepaid Card Use Up 18% as Consumers Drop Debit: Study.” Bloomberg. 11 April 2012. 22. Ibid. 23. Ibid. 24. Ibid. 25. “Remittance Prices Worldwide.” The World Bank. November 2011. 26. Morrison, David. “Financial Services to Unbanked Reflect Potentially Huge, Report Suggests.” Credit Union Times. 7 November 2012. Bibliography “2011 FDIC National Survey of Unbanked and Underbanked Households.” Federal Deposit Insurance Corporation. September 2012. Ahmed, Azam. “Bank Said No? Hedge Funds Fill a Void in Lending.” NY Times Dealbook. 8 June 2011. Bensinger, Ken. “A vicious cycle in the used-car business.” Los Angeles Times. 30 October 2011. Chassany, Anne-Sylvaine and Jesse Westbrook. “Private Equity Enters Banks’ Turf in Europe.” Bloomberg. 8 February 2012. “Company Profile.” Yahoo! Finance. 2012. Cox, Jeff. “Companies Sitting on More Cash Than Ever.” CNBC. 23 October 2012. Federal Reserve Economic Data. “Total Credit Market Debt Owed (TCMDO).” Federal Reserve Bank of St. Louis. 2012. Foley, C. Fritz; Raman, Ananth and Nathan C. Craig. “Inventory-Based Lending Industry Note.” Harvard Business School. 2012. “Issuance in U.S. Bond Markets.” SIFMA. 2012. Jung, Jeff and John Tamisiea. “Not Your Parents’ Royalty Fund.” McDermott Will & Emery LLP. 12 October 2010. Kacperczyk, Marcin and Philipp Schnabl. “When Safe Proved Risky: Commercial Paper During the Financial Crisis of 2007-2009.” Journal of Economic Perspectives. Vol. 24: Issue 1. 2010. Landler, Mark. “Obama Signs Bill to Promote Start-Up Investments.” The New York Times. 5 April 2012. Lee, Don. “U.S. families’ debt loads decline to pre-recession levels.” Los Angeles Times. 15 October 2012. Marcinek, Laura. “Biggest U.S. Banks Curb Loans as Regional Firms Fill Gap.” Bloomberg. 25 June 2012. McArdle, Megan. “On Poverty, Interest Rates and Payday Loans.” The Atlantic. 18 November 2009. Morrison, David. “Financial Services to Unbanked Reflect Potentially Huge, Report Suggests.” Credit Union Times. 7 November 2012. Ody, Elizabeth. “Prepaid Card Use Up 18% as Consumers Drop Debit: Study.” Bloomberg. 11 April 2012. “Remittance Prices Worldwide.” The World Bank. November 2011. Richardson, Karen. “Bankers Hope for a Reprise of ‘Bowie Bonds.’” The Wall Street Journal. 23 August 2005. Tempkin, Adam. “Bonds backed by drug-royalty cashflows make a return.” Reuters. 5 March 2012. “The Deloitte Shadow Banking Index: Shedding Light on Banking’s Shadows.” Deloitte. 2012. Wayne, Alex. “Health-Care Spending to Reach 20% of U.S. Economy by 2021.” Bloomberg Businessweek. 13 June 2012. Zumbrun, Joshua. “Fed Sees Rising Demand for Auto and Mortgage Loans.” Bloomberg Businessweek. 31 October 2012.MSF Enterprises, LLC www.msfenterprises.com Copyright © 2012